Book A. The wage rate doubles: Here’s what it changes
This is good news for the nearly 55 million French who own a Livret A. To counter inflation, his pay rate will double from 1% to 2% starting this Monday, August 1st.
In concrete terms, a saver with EUR 1,000 in their savings book A benefits from a payment of EUR 20 for a whole year instead of EUR 10 with the previous tariff.
Note that this €20 will be added to the initial capital for the following year, ie €1,020, which will bring in just over €20 the following year. This is the principle of capitalization of interest, remembers Moneyvox. With regular remuneration after 10 years, the initial €1,000 did not result in €200 (i.e. €20 per year), but €218.99.
Also read: Savings book A: The course is rising… but is it really worth it?
The Livret A rate, which was 0.5% at the beginning of 2022, doubled for the first time on February 1st.
While this rise may seem like good news for French savers, even if the interest rate is rerated, it remains much lower than inflation (5.8% in June).
The popular savings rate reserved for those on modest incomes (maximum €20,296 per year for one person) has risen from 2.2% to 4.6%. We have to go back to 1998 to have a comparable rate (4.5%).
In 2023, the increase in the rate is expected to continue
The remuneration of the Livret A, a savings product held by most French people, depends on inflation (5.8% in June) and the interbank rates at which banks exchange money in the short term. However, inflation has not yet peaked.
The governor of the Banque de France indicated in mid-July that the increase in the livret A should continue in 2023. ” Of all probability […] the upward movement of the Livret A tariff will continue on February 1 next year.”said François Villeroy de Galhau, without speculating on a number, during a press conference on regulated savings.
Also read: How inflation affects the return on your savings account A
The booklet was always celebrated
With the first rate hike in February, the French continued to top up their Livret A accounts in the first half of the year, with almost €16.5 billion net added to this popular asset.
If this sum is slightly lower than the 16.74 billion euros net raised in the first six months of 2021, while France was still experiencing episodes of confinement and lockdown, it is much more than the 11.57 billion euros of 2019 .
2020, meanwhile, has been exceptional with 20.41 billion in the first half of the year, a direct result of the pandemic and lockdown.